MmO2 helped by Christmas sales
LONDON, England (Reuters) -- MmO2, Europe's sixth-largest mobile phone group, topped forecasts on Wednesday by winning 855,000 new subscribers in a bumper Christmas quarter which sent its shares climbing.
The company, which ranks fourth in Britain in terms of subscribers behind Vodafone Group, Orange and T-Mobile, said it gained 430,000 net new subscribers in Britain and 335,000 in Germany.
The numbers comfortably beat estimates, although analysts expected forecasts to be topped in the wake of robust customer numbers from market leaders Vodafone and Deutsche Telekom's T-Mobile last week.
Helped by two percent growth in customer revenues in Germany and Britain, Mmo2's shares rose 2.42 percent to 84.75p by 1030 GMT, bucking a weak European telecoms trend. But some analysts warned client growth in mature markets is often driven by margin-eroding price promotions.
"Whilst the mmO2 figures look fairly upbeat, we remain concerned that margins will disappoint after what seems to have been a very good quarter for European mobile customer growth,'' said Nomura telecoms analyst Mark James.
MmO2 expects UK service revenues to grow 10 percent from £2.7 billion ($4.96 billion) last year and has forecast an EBITDA (earnings before interest, tax, depreciation and amortization) margin of 30 percent, up from 27.7 percent.
The group, which reports full-year results on May 18, expects German EBITDA margins in the mid-teens from just 2.5 percent last year.
MmO2, which last April sold its underperforming Dutch business, has been dogged by speculation that it has similar ambitions for its loss-making German operation.
O2 Germany, the smallest of four German cell phone groups, has long been tipped as the perfect partner for number three rival, KPN-controlled E-Plus. The two groups have talked, but negotiations broke down because of price.
Chief Executive Peter Erskine told reporters he sought to "create real options'' in Germany although he was not actively trying to sell the unit he would consider any "powerful'' offer.
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